August 10, 2015
Saving for your home
Whether you are wanting to buy your first home, your next home or an investment property you will require a deposit. Deposits come in many forms, from genuine savings, gifts, sale of assets or equity in property. Saving can often be hard, especially if you are renting or have unexpected expenses.
Some questions you may have about saving for a home are;
Where do I start?
Open a separate savings account. Sometimes the simplest thing to do is keep your savings separate to your everyday account. A lot of the banks & credit unions have ‘bonus saver’ accounts or online savings accounts that are separate from your everyday account.
If you are easily tempted to withdraw from your savings see if your bank can put a restriction on your internet banking and card so you can make deposits and enquiries only. This way you can watch your savings grow and it is harder to withdraw.
Make a budget. This way you will know exactly how much you need for your everyday living expenses, bills and rent. Ensure you have money to go out for a meal, or do something you enjoy so you are less likely to dip into your savings.
What is Genuine Savings?
Genuine savings is money you have saved over a period of time. Most lenders will require you to have saved or held your 5% deposit over a minimum of 3 months. There are a few lenders that will accept things like rental payments, tax returns or bonuses as genuine savings, these is not accepted by all lenders so it is important that you understand the requirements of the lender.
How much will I need?
How much you will need for a deposit will depend entirely on your intentions and situation.
If you are buying your owner occupied home you will require at least 5% in genuine savings plus fees, some lenders will require at least 10% savings plus fees. Fees come in the form of Lenders application & settlement fees, Settlement Agent fees, Government fees and lenders mortgage insurance. First home buyers are exempt from paying stamp duty in certain states and are sometimes eligible for grants.
Purchasing Investment properties is a little more complicated. Only a few lenders will lend up to 95% for investment properties while others will only lend up to 80% or 90%. If you are planning to purchase an investment property please contact me for specific details regarding each lender.
Make a plan, set goals and start saving!
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